EU: Various Factors Contribute To 'Celtic Tiger's' Success (Part 4)

November 29, 2001 00:00 GMT

By Breffni O'Rourke

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EU: Various Factors Contribute To 'Celtic Tiger's' Success (Part 4)

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Success depends on many factors, and as a nation, the Republic of Ireland appears to have got the mix of ingredients right. Delegations from all over the world, including from Central and Eastern Europe, regularly visit for advice on how to stimulate economic growth the way the Irish have done in recent years. In his fourth and final report on Ireland's "Celtic Tiger" economy, RFE/RL correspondent Breffni O'Rourke looks at some of the factors that have contributed to Ireland's boom.

Dublin, 29 November 2001 (RFE/RL) -- Dublin, the capital of the Republic of Ireland, has always had charm, its calm Georgian squares contrasting with a lively, raffish student quarter. Its myriad pubs are filled with men of ready wit, and the city's literary circles are renowned.

And now there is an extra element, something humming in the air -- namely, business.

A traveler senses the new atmosphere on arrival at the Dublin airport, with its advertisements for high-tech firms and research and development companies. Everywhere, there is an alert, "can-do" attitude among the predominantly young population.

Dublin's streets are filled with people from many countries, for Ireland today is a magnet for foreigners because of its job opportunities, both at the casual and professional levels.

One of the country's recent arrivals is 22-year-old Canadian student Celine Ahmed from Toronto. She got a job as a hotel receptionist after only a week in the country. She says she's enjoying Dublin's atmosphere.

"It's very cosmopolitan [here]. What brought me to Ireland is that as I had just graduated in June and decided to take a year off -- [and] Ireland at the moment is very good in terms of jobs -- I was told that if I go to Ireland, I am pretty much guaranteed a job. And I decided that was a good place for me to go."

Celine will be on her way home soon, but other foreigners are intent upon longer stays -- namely, the companies that have set up operations in Ireland. One is the French pharmaceuticals manufacturer Servier Industries.

Servier established a small plant employing 10 people in the seaside town of Arklow, some 70 kilometers south of Dublin, in 1989. Today, it employs 110 people and plans to expand the pharmaceutical capacity of the plant threefold in the next 10 years, doubling the workforce.

The general manager of the Servier plant, Antoin Potie, said his company will make the Arklow facility the second-ranking plant after its headquarters in Orleans in France, ahead of factories in Brazil, Poland, Spain, Russia, Hungary, and elsewhere.

Potie has high praise both for the Irish authorities and the workers. He speaks of a "love story" between his company's founder, Doctor Jacques Servier, and Ireland: "When the IDA [Ireland's Industrial Development Authority] came to France to explain to Servier Ireland's development strategy, Doctor Servier was very [positively] convinced about this strategy."

Potie stresses that the attitudes of Irish employees are a key ingredient of the story: "We can say that the quality policy, the quality culture of this country, of the Irish people, is good for pharmaceutical activities."

Another key factor the French manager notes is the ultra-low corporate tax rate of 10 percent that is imposed by Ireland on foreign corporations. He says that's about one-third the equivalent tax rate in France.

A major project that illustrates the way a small country like Ireland can think big is the International Financial Services Center (IFSC). The IFSC is situated on 520 hectares of prime riverside land just outside the Dublin city center. Formerly derelict docklands, the area is now filled with prestige low-rise office and apartment buildings designed to fit into the city's historic fabric. The project organizers, the Dublin Docklands Development Authority, plan social housing as part of the next building phase.

So far, some 400 financial service companies have moved into the financial center, making Dublin a big player in that market sector. The majority of those companies are from the United States, but increasingly there's also a European presence, with Italians being the latest group to discover the center.

The Development Authority's marketing manager, Carmel Smith, explains how Dublin, on the periphery of Europe, has been able to turn itself into one of the headquarters for international financial services.

"What attracted them initially was that when we decided to get involved in the international financial services industry, we looked at making ourselves the most attractive area from a tax point of view. So we had to apply to the European Union under the competition rules to put in a special tax regime for these companies now here in Ireland at that stage. We already had a special tax regime in place for manufacturing, and that was set at 10 percent corporate tax rate for international companies."

Smith said the idea was to have a similarly attractive tax rate for financial services companies -- and the EU did, in fact, approve that rate. She says the low tax was the initial drawing card that attracted many companies to Dublin. But, as the center matures, tax breaks are no longer the dominant reason.

"Most of them [the financial service companies] will say [they like Dublin] because it's a good location to do business. It's a very pro-business location. The people they recruit here are of the highest caliber. There's a very good work ethic among Irish people."

She also praises the quick and unbureaucratic marketing methods of the Irish government's Industrial Development Authority (IDA), saying: "If the IDA secured a company to come in and look at Dublin as a base for their financial services, they provided a complete 'one-stop shop.' In other words, if a company was coming to look at Dublin, the IDA would organize a meeting with the governor of the [Irish] Central Bank, the chairman of whatever [agency was necessary], the secretary of the department of finance, and even our prime minister."

The International Financial Services Center has had a steady stream of visitors, many from Central and Eastern Europe, eager to learn lessons they can apply at home.

Of course, not everything is a bed of roses in Ireland. The country has not been immune to the world economic downturn, magnified by the terrorist attacks in the United States on 11 September. Redundancies have started in a number of industries, including tourism, hard-hit because of fallout from the 11 September attacks.

But economic growth is continuing in Ireland, although at a reduced rate. As analyst Brendan Halligan of the Institute of European Affairs puts it, the Irish economy was expanding at an unsustainable rate anyway and needed to cool down. He's optimistic the situation will improve again soon: "I wouldn't worry about the Irish dream. I think it lives on."

(This piece is the last in a four-part series that included the following: